H&M to ramp up investment after disappointing sales growth

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Hennes & Mauritz is launching its eighth brand and is investing heavily to get its clothes faster into shops as the Swedish fashion retailer responds to sluggish sales growth.

Arket will be launched this autumn, starting with a shop in London, and will offer more expensive clothes than H&M for men, women and children as well as in-store cafes based on the new Nordic cuisine. It will offer “quality in simple, timeless and functional designs”, according to the retailer.

H&M has already had success with its more upmarket Cos and & Other Stories brands and will start opening stand-alone versions of its H&M Home stores from next year.

The new launch comes against a backdrop of weaker than expected sales growth, with first-quarter revenues in local currencies rising just 4 per cent against a full-year target of 10-15 per cent. Operating profit fell 3 per cent to SKr3.16bn but was ahead of analysts’ expectations. It blamed tough market conditions in the US and central and eastern Europe for the poor sales growth.

Karl-Johan Persson, chief executive, said:

To meet the rapid change that is going on in fashion retail we need to be even faster and more flexible in our work processes, for example as regards buying and allocation of our assortment. We are therefore investing significantly in our supply chain, such as in new logistics solutions with greater levels of automation, but also in optimising our lead times. In the changes we are making, advanced analytics will provide important support for decision making.

Arket will open stores in London, Brussels, Copenhagen and Munich, and joins other H&M brands including Monki, Weekday and Cheap Monday.

Photo: Bloomberg

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